This sentence seems particularly interesting if Tolkien was dictating this letter: "As far as I can see, there can be no more books about hobbits but of course hobbits will feature in this new book The Silmarillion."

What do you think Tolkien meant by "of course hobbits will feature in this new book The Silmarillion"?

Of course, it is also possible that Tolkien did not dictate this letter.